A blog dedicated to all things related to real estate law in Florida including foreclosure, construction, homeowners associations, closings, refinances, leasing and title

Saturday, November 13, 2010

Community Living Types - Condos and Homowners Associations and more

South Florida provides an opportunity to live in a variety of community types, each which provides both benefits and drawbacks.These include condominiums, cooperatives, homeowners associations, communities with restrictive covenants without an association, mixed communities with both condominium and homeowners associations and a property owners association.Understanding the restrictions each type imposes is an important part of deciding which community type to live in, since many people have a hard time in the more restrictive communities.

Condominiums:

Condominiums are statutory creatures created to solve a specific problem, conveying ownership (fee simple) title to an area in space 100 feet above the ground.Prior to the existence of condominiums, the method to convey ownership in vertical buildings was cooperatives, which are described below.

The first condominium in the United States was established in 1958 and Florida enacted its first condominium act in the 1960s.Since then the law in Florida has evolved substantially to create a very rigid framework governing the creation, sale and operation of Florida condominiums.

Condominium ownership is designed to address the problem of many people living in close quarters.This includes prohibitions on parking, noise, type of flooring, leasing and sale restrictions, alterations, use restrictions, pet restrictions and even age restrictions.

In addition to the statutory requirements, all condominiums are created and controlled by the constituent documents created by the developer, the Declaration of Condominium, Articles of Incorporation, By-Laws and Rules and Regulations.These are part of the comprehensive Prospectus required by the Developer to give to all purchasers.These documents and any amendments thereto must be given to all buyers prior to closing.

After turnover, the condominium association is run by its board of directors, elected by the members of the community.The board is supported in its operation of the association by professional managers, lawyers and accountants who aid in the business side of the operation.The conduct of the board, including the conduct of meetings, are strictly controlled by law to allow for open disclosure for the benefit of all owners.The Board also establishes the budget for the condominium, and each owner pays an assessment to support the operation of the condominium.

Cooperatives:

Before condominiums were created the most common method to convey title to vertical buildings was through cooperatives.In fact many of the older Palm Beach buildings are cooperatives.

Unlike condominiums, which are conveyed by deed like any other property, there is no deed involved in cooperatives.Instead, buyers receive an assignment of the proprietary lease between the Association and the Unit Owner.This is because the entire building is owned by the Association, and the Association leases each unit to the occupant.In addition, each long term owner gets a stock certificate representing their percentage ownership in the Association.

Cooperatives are controlled by a statute similar to the Condominium Act.In addition, like a condominium, the cooperatives are controlled by similar situated documents, Declaration of Cooperative, Articles of Incorporation, By-Laws, Rules and Regulations and Proprietary Lease.Cooperative owners also face many if not all of the same restrictions as condominium owners.Like a condominium, the cooperative association is also run by an elected board of directors and raise operating funds through assessment.

Homeowners Associations:

Created as a method to provide uniform restrictions in traditional neighborhoods, homeowners associations were originally simple contracts between developers and the buyers.However, due to a combination of large scale development and a growing perception of problems within these communities, the legislature began to slowly adopt restrictions controlling the operation of homeowners associations.Today’s rules are fairly extensive, but do not reach the level of control imposed against Condominium and Cooperative Associations.

In addition to the statutory restrictions, each homeowners association is controlled by a Declaration of Covenants and Restrictions, as well as Articles of Incorporation, By-Laws, and Rules and Regulations.Many restrictions found in condominium living are also found in homeowners associations.The operation of the homeowners association is controlled by an elected board, with similar restrictions as condominium boards.

Property Owner Associations (POA):

Large communities frequently have multiple types of properties contained within that share common areas and facilities, and which can include both condominiums and planned unit developments, and even commercial condominiums.In order to manage the larger operation, a property owners association is created which oversees the entire project.

POAs or Master Associations are controlled by a Master Declaration, which dictates how the project is operated.Operations of the POA are controlled by a board, which can be formed by elections of all members, or, more commonly, by participation by directors from each underlying association.

Assessments for POAs are used to operate the Master Association.Some POAs direct bill the members and have a lien against individual owners.In other POAs, the assessments are paid by the Associations themselves, who collect the assessment form their members and then pay them in bulk to the POA.

Protective Covenants:

Many communities are not governed by an Association, but are still subject to restrictions, usually in the form of Protective Covenants.This is especially true of planned communities developed prior to 1980.The Protective Covenants establish the restrictions on use, which generally include size requirements, home styles and some use restrictions.Since there is no Association, the only way to enforce the restrictions is for the other owners to file suit for breach.

Each community type imposes different and various types of restrictions.Fully understanding these restrictions before purchasing is a crucial to successful ownership.Failure to fully understand these restrictions can result in substantial conflict between an owner, other owners and the Association.

2 comments:

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About Me

I am a Florida Board Certified Real Estate Attorney with 30+ years of residential and commercial real-estate experience.
I am an equity partner in Ward, Damon, Posner, Pheterson & Bleau, a mid-sized law firm serving all of South Florida, with three offices in Palm Beach County. Our firm specialize in and can assist in buying, borrowing and selling property throughout South Florida. I can be reached at 561.594-1452, mjposner@warddamon.com or www.warddamon.com